What to Expect After the Honeymoon: Testing a Lifecycle Theory of Franchise Relationships

[Display omitted] ▶ Franchise relationships proceed through honeymoon, routine, crossroad, and stabilization stages. ▶ Relationship properties display an inverted u-shaped curve across lifecycle stages. ▶ Franchisees’ intermediate lifecycle phases are the most critical for the system. This research examines the evolution of interorganizational relationships in a franchising context. Using U-curve theory, we develop three hypotheses and contrast them with traditional lifecycle theory. Three groups of constructs are affected by lifecycle: cooperation variables, dependence variables, and relationship variables. Four distinct stages emerge, with highest levels of variables in the honeymoon stage, lower levels in routine and crossroad stages, and increasing levels in the stabilization stage. Franchisors should strive for “stability on high levels” before operational realities influence the franchisees. Franchisees’ intermediate lifecycle phases are most critical for the system, since opportunistic behavior and switching are most likely.